Australian Dollar Surges as RBA Signals Prolonged Policy Tightness; AUD/USD Hits 0.6530

Summary:

The Australian Dollar strengthened on Monday, pushing AUD/USD to near 0.6530 after RBA Deputy Governor Andrew Hauser reaffirmed the need to keep policy restrictive to curb inflation.

BUY AUDUSD

Close Time

CLOSED

0.65277

Entry Price

0.66000

0.64800

0.69488 +0.00493 +0.71%

11.3

Pips

Profit

0.64800

0.65390

Exit Price

0.65277

Entry Price

0.66000

The Australian Dollar (AUD) climbed sharply against the US Dollar (USD) on Monday, rising 0.56% to around 0.6530 during the European session as traders responded positively to hawkish comments from the Reserve Bank of Australia (RBA). The move underscores renewed confidence in the RBA’s commitment to maintaining tight monetary policy amid persistent inflationary pressures and a still-resilient domestic economy.

Speaking at a UBS conference in Sydney, RBA Deputy Governor Andrew Hauser struck a firm tone on the inflation outlook, emphasizing that the central bank must keep policy sufficiently restrictive to bring inflation back to target. “Achieving the inflation goal will require policy to be restrictive enough to close the output gap,” Hauser stated, adding that the economy continues to “run above its potential,” which limits scope for “near-term rate cuts.”

His remarks were interpreted by markets as a strong signal that the RBA will maintain a hawkish bias well into 2025, defying speculation of early easing that has circulated amid signs of slowing global growth. Traders reacted by bidding up the Aussie across the board, lifting it to multi-day highs against major peers including the Japanese Yen and the Euro.

Recent data has reinforced the RBA’s cautious stance. The Australian Bureau of Statistics (ABS) reported in late October that consumer prices rose by 1.3% in the third quarter, accelerating from 0.7% in Q2. This unexpected pickup in inflation suggests price pressures remain sticky, particularly in services and housing, and complicates the central bank’s path toward its 2–3% target band.

Economists now believe that while headline inflation may continue to moderate in coming quarters, underlying core measures remain uncomfortably high, justifying a longer hold at elevated rates. This dynamic has made the RBA one of the more resolute central banks among its developed-market peers, contrasting with growing expectations of easing from the Federal Reserve, Bank of Canada, and European Central Bank next year.

Meanwhile, the US Dollar traded largely flat on Monday as investors digested the latest developments in Washington. The US Senate over the weekend approved a stopgap funding bill that will keep the government open until January, avoiding a partial shutdown that had loomed over markets in recent weeks.

The bipartisan deal—brokered with cooperation from eight Democratic lawmakers—ensures short-term stability but leaves larger fiscal questions unresolved. The agreement also includes a commitment to hold a December vote on extending subsidies under the Affordable Care Act, a key concession to Democrats.

At the time of writing, the US Dollar Index (DXY), which measures the Greenback’s strength against a basket of six major currencies, was steady near 99.60, reflecting subdued investor reaction as the bill merely delays rather than resolves the broader fiscal impasse. Market participants now turn their attention to upcoming US inflation data and Federal Reserve commentary, which will provide fresh clues on the timing of potential rate adjustments in 2025.

Technical Analysis

From a technical standpoint, AUD/USD has staged a decisive rebound, breaking above a minor bearish trendline and testing a key resistance level around 0.6518, which serves as the neckline of a developing double-bottom formation. This pattern typically signals a potential trend reversal, hinting that the pair may attempt to build on recent gains if buying momentum continues.

Momentum indicators such as the Relative Strength Index (RSI) have turned positive, reinforcing the bullish tone in the short term. A sustained move above 0.6520 could open the door for further upside toward 0.6560 and eventually 0.6600, levels not seen since early October.

However, the pair still faces technical headwinds, primarily due to its position below the 50-day Exponential Moving Average (EMA), which continues to act as an overhead barrier to sustained recovery. Failure to break decisively above the EMA could invite fresh selling pressure, pushing the pair back toward 0.6480 or even 0.6450.

TRADE RECOMMENDATION

BUY AUDUSD

ENTRY PRICE: 0.65330

STOP LOSS: 0.6480

TAKE PROFIT: 0.6600

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